Financial Literacy and Retirement Planning in Canada / David Boisclair, Annamaria Lusardi, Pierre-Carl Michaud.

Format:

Book

Author/Creator:

Boisclair, David.

Contributor:

National Bureau of Economic Research.

Lusardi, Annamaria.

Michaud, Pierre-Carl.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20297.

NBER working paper series no. w20297

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

Financial literacy and Canadians' capacity to plan for retirement is of primary importance for the policy debate over pension system reform in Canada. In this paper, we draw on internationally comparable survey evidence on financial literacy and retirement planning in Canada to investigate how financially literate Canadians are and who does plan for retirement. We find that 42 percent of respondents are able to correctly answer three simple questions measuring knowledge of interest compounding, inflation, and risk diversification. This is consistent with evidence from other countries, and Canadians perform relatively well in comparison to Americans but worse than individuals in other countries, such as Germany. Among Canadian respondents, the young and the old, women, minorities, and those with lower educational attainment do worse, a pattern that has been consistently found in other countries as well. Retirement planning is strongly associated with financial literacy; those who responded correctly to all three financial literacy questions are 10 percentage points more likely to have retirement savings.

Notes:

Print version record

July 2014.